Editorial: Lansing must get Michigan's priorities straight

January 5, 2014

Rick Nease/Detroit Free Press

By The Detroit Free Press Editorial Board

It’s not exactly raining money in Lansing these days, but news that state revenues are up about $1.3 billion over three years leaves lawmakers with an interesting question — how to spend the windfall? State House Speaker Jase Bolger, R-Marshall, thinks tax cuts (for people, not businesses) are the way to go, but also says early childhood education and roads are priorities. House Minority Leader Tim Greimel, D-Auburn Hills, echoes Bolger’s interest in tax cuts and educational investment. We’re all for tax relief, but Michigan has a lot of pressing needs we hope that the Legislature will consider in 2014:

Municipal financing solution

There’s a growing realization in all corners of local government that the municipal funding model is broken. Over the last decade, the state has slashed the revenue-sharing payments that it makes to cities, even as property tax revenue collected by local governments plummeted and the cost of pensions and retiree health care skyrocketed. Last year, the Legislature eliminated the personal property tax on businesses. So it’s time for lawmakers to take the lead in fixing the system that they helped to break, since Gov. Rick Snyder won’t (Snyder says he’s open to hearing proposals to fix the problem — not exactly stalwart leadership).

The Legislature will decide on a replacement for the personal property tax this year, which must be approved by a statewide vote. Replacing those revenues is important, but it’s not sufficient. Even financially well-managed cities are struggling to meet retiree health care obligations — statewide, the health care liability is about $15 billion.

Oakland County Deputy Executive Bob Daddow has proposed forming a statewide pool to allow cities struggling with retiree health care costs to issue low-interest bonds to pay those liabilities, according to A Better Michigan’s content partner Bridge Magazine. The pool would invest the bond proceeds at a higher rate of return, and use that income to pay debt service and pay retiree health care costs. The Michigan Municipal League supports the creation of a similar pool. A good start, but not comprehensive enough. Daddow’s plan, for example, wouldn’t work for cities in significant financial distress, because they’d be unable to issue bonds at a low enough interest rate to return profit on an investment.

The entire system — how we fund local government and how we manage post-employment benefits like health care and pensions — must be re-envisioned. We need a statewide solution, not a series of patchwork repairs. Will lawmakers have the vision and courage to confront this problem head on? Lansing watchers are skeptical.

Michigan's sorry roads

The saddest part of Michigan’s inability to come up with much-needed new road funds is the fact that just about everyone agrees it has to happen.

No one likes paying for suspensions and tires destroyed by gaping potholes. But overcoming Republican resistance to any new tax or fees, while also besting Democratic opposition to higher costs for low-income residents, has proved too much.

That’s too bad. This is a classic case of investment up front paying big dividends down the road, and was a centerpiece of Snyder’s original reinvestment campaign.

The state’s shoddy infrastructure is a turnoff to people who live here, to prospective businesses that might want to locate here, and even to the trucking industry that passes through (while paying not nearly enough fees) each year.

Snyder would like to raise a billion dollars more for roads each year with increased registration fees. But that proposal has never gotten any traction in the Legislature. Other ideas include raising the gas tax, which probably needs to be done, anyway.

It would be a crowning achievement for either the governor or an enterprising, bipartisan group of legislators to find common ground on this issue this year. Elections are important, yes, and distracting. But this is a basic part of the state’s infrastructure that needs fixing.

Somehow, our elected officials ought to be able to get it done.

Don't delay on renewable energy

Lawmakers should be guided by the Michigan Public Service Commission’s fall report, which said Michigan utility companies should be able to triple the amount of energy they produce — from 10% to 30% — from renewable sources, including wind and solar power.

The report, which notes that the price of renewable energy has dropped noticeably, spells out goals of 15% renewable energy by 2020 and 30% by 2035.

In developing this policy, legislative leaders shouldn’t stand for delays. A higher renewable energy standard will create jobs, with the construction of windmills, and reduce pollution from coal-powered plants.

Michigan currently requires utilities to get 10% of their energy from renewable sources by 2015 — a goal that the state’s major utilities are quickly closing in on, and one that is less ambitious than most of the 29 other states with renewable energy standards.

The commission’s report and Snyder’s push for renewables come after environmentalists put a constitutional amendment on the 2012 ballot requiring Michigan to reach for a 25% renewable energy standard by 2025. Voters rejected the measure. Opponents argued the goal would be too costly. This editorial board said the issue must be dealt with legislatively and not in the state Constitution.

Fast forward to 2014, and it’s clear the Legislature should build on the momentum from the Snyder administration’s due diligence, and move quickly to increase Michigan’s renewable energy standard.

Education investments net big returns

There’s no shortage of competition for state education dollars. Higher ed has been cut, and the state continues to suffer from a shortage of college graduates.

But more important is investment in early childhood education, and this is one Michigan trend that’s moving in the right direction.

Snyder won a significant increase — $65 million — to the state’s early childhood education budget, about half of what education advocates said was necessary. The state has also won a $51.7-million federal grant that will help expand access to early childhood education, and the governor plans to ask for an additional $65 million in the next fiscal year’s budget.

The research is compelling: Kids who don’t get pre-kindergarten education start school at a competitive disadvantage, and making up the gap is difficult. There’s a direct return on investment for every dollar spent on pre-K, and folks from across the spectrum — business leaders to educators — recognize the importance of prioritizing early education.

The Legislature needs to get on board — approve the increased funding that Snyder says he’ll ask for, at a minimum.

But lawmakers can’t neglect higher education. Not every Michigan student will advance to a two- or four-year college (and that’s why early education and K-12 education are so important), and college won’t be accessible to all without a sound K-12 system, but the state needs to boost its number of college graduates. This is another pressing need that is recognized across the political spectrum.

Oregon lawmakers recently launched a pilot program that could result in a college education for every Oregonian at a minimal charge, just 3% of future earnings over 20 years. Should Michigan follow suit? Not necessarily. But as tuition continues to increase, the Legislature needs to get creative about increasing the number of Michiganders with college degrees.